Plan carefully when using a competitor’s trademark in your keyword advertising campaign

A recent court decision from British Columbia may have a significant impact on brand owners’ digital marketing activities. 

In the decision of Vancouver Community College v Vancouver Career College (Burnaby) Inc., the British Columbia Court of Appeal (BCCA) concluded that certain uses of a competitor’s trademark in keyword advertising campaigns may cause enough consumer confusion to result in trademark infringement (in the case of a registered trademark) or passing off (the term ascribed to infringement of an unregistered trademark.  Notably, the BCCA did not consider it an offense to merely purchase a competitor’s trademark for purposes of strategic keyword advertising activities – liability will turn on how that trademark is, in fact, used.

In this case, Vancouver Community College was alleging that its competitor Vancouver Career College was making unauthorized use of its “VCC” unregistered trademark in its keyword advertising, which had the effect of causing confusion among consumers and misrepresenting Vancouver Career College’s services as being those of Vancouver Community College.  This was largely due to Vancouver Career College’s use of the domain name VCCollege.ca and use in its advertising campaign.  People searching online for “VCC” would see Vancouver Career College’s sponsored ad to direct it to their website, though on that website there was no further reference to “VCC” and it was clear that the website was not that of Vancouver Community College. 

At trial, in 2015, the British Columbia Supreme Court concluded that no passing off or misrepresentation had taken place, which effectively validated the practice of acquiring competitors’ trademarks for use in keyword advertising campaigns to direct consumers searching for one company’s trademark to the sponsored links of a competitor. 

Notwithstanding that Vancouver Community College was able to produce evidence of numerous students who had searched for “VCC” online looking for Vancouver Community College’s website and instead clicked on the VCCollege.ca link thinking they were the same thing, the trial court stated that when assessing whether one trademark is being confusingly passed off as the trademark of another person, the test for confusion in this case depends not on when the consumer was reviewing the initial search results, but rather on their impression once they had visited the site in question and whether they could still be deemed to be confused at that time.

Vancouver Community College appealed that decision and, recently, the BCCA overturned it, stating that when assessing whether a consumer could be confused into thinking the “VCCollege.ca” domain is the same as Vancouver Community College’s “VCC” trademark, the material time is precisely at the stage of receiving search results since the consumer’s first impression is a cornerstone of the legal test in Canada for confusion between two trademarks.

Interestingly, however, the BCCA did upheld one very important aspect of the trial court decision – namely, that Vancouver Career College had not done anything wrong or offensive by virtue of having purchased the “VCC” domain for purposes of its keyword advertising campaigns. 

The result of this B.C. decision is that brand owners may continue to purchase competitors’ trademarks as part of their digital marketing activities without offending or being offside any statutory or common law trademark rights of those competitors.  But since companies are at risk of liability for trademark infringement or passing off at the time of a consumer’s receipt of initial search results (and not when they actually go to visit a website), the actual use of a competitor’s trademark in keyword advertising will be determinative. 

Sponsored links should be carefully constructed with a brand owner’s digital marketing team to ensure that they are not presented in a way that is intended, or could be construed to be, misleading or misrepresentative of an association with the competitor’s brand.